Engineering jobs fall prey to Alaska's recession

Ken Ayers is not optimistic about the near future of the Alaska economy. The president of a civil engineering firm whose roots in the state go back nearly 70 years, Ayers laid off a dozen employees in 2016 and cut hours for others.

Good wages and steady employment are typical for engineers of all sorts, but Alaska's recession is dulling the industry's usual vibrancy. The architecture and engineering industry through the first three quarters of 2016 was down about 600 jobs from the previous year, according to the latest numbers from the state labor department. That's a drop of about 12 percent from 2015.

"I think it will get worse. I think business is going to drop another 25 to 30 percent this year,"  said Ayers, president of Anchorage-based Lounsbury and Associates. "And I think we will see firms that are on shaky financial ground probably fold."

Engineering encompasses multiple related professions, nearly all of which have been affected by slowdowns in the oil and construction industries. Hiring for petroleum and chemical engineers has slowed considerably as activity in the fossil fuel industry has declined, new discoveries notwithstanding. Other engineering fields, including mechanical, civil and electrical, are also being hit by the downturn in jobs.

[Alaska construction spending expected to drop by 10 percent in 2017]

Dowl, one of the state's largest engineering firms, is down about 30 positions in Alaska from a recent high of 200, said president Stewart Osgood. The company, which was started in Alaska in 1962, has relocated nearly a dozen employees to its offices Outside, which are spread across several states in the western U.S.

"Being in this state for so long, it has become cultural for us to weather downturns. As we saw the headwinds building in Alaska's economy, we started not to fill vacant positions and offering relocations," Osgood said. "We're bullish on Alaska. It's where we were raised, but we recognize the economic realities."

To cope with those realities, the company is sharing work generated by projects in other states with its Alaska offices and has expanded its services to include permitting work under the National Environmental Policy Act and water projects throughout the West.

The sour reality of the job market in Alaska doesn't quite seem to have spread to academia. Fred Barlow, dean of the University of Alaska Anchorage's College of Engineering, said he is still seeing high demand for courses, particularly in mechanical engineering. The department does not keep track of how graduates fare in the job market, but Barlow, who is battling budget cuts brought on by the state's fiscal crisis, insists that hiring by firms both in Alaska and Outside is still robust.

"Anecdotally, what I'm hearing is that they're still getting jobs," he said of his program's graduates, but he conceded that entry-level job candidates in Alaska "have to look a little harder than they have historically."

"It used to be if you had a pulse, you would get three job offers. That's not the case anymore," he said. "Historically, it's been the big oil companies picking up our students, but they're not hiring now."

Ayers said his firm isn't even offering internships, which at Lounsbury are paid, because of the lack of work.

Deborah Allen, executive director of the Alaska Engineering Education Foundation, characterized the market for entry-level engineers in Alaska as "flat." The foundation awards engineering scholarships and runs the national Mathcounts program in Alaska.

"It's pretty nonexistent for entry-level positions. That's unusual for the Alaska market," said Allen. "There are positions for more experienced engineers, just not entry-level."

Osgood said that in this market, Dowl "would be cautious" about adding engineers with less experience.

"That's an unfortunate thing, because if that keeps happening for five to 10 years, your workforce tends to gray and get more expensive, and that creates booms, busts and echoes within your workforce," he said. "That may be the most difficult part of all, is that young, talented folks are finding it difficult to get a job in Alaska."

Labor economists classify engineers and architects together within a larger, rather amorphous category called "professional and business services." The sector includes a diverse set of jobs — such as lawyers, travel agents, accountants and janitors — and economists are keeping a close eye on it to gauge the spreading effects of recession from oil and construction to elsewhere in the economy.

"Once you start to see losses there, you know how the main drivers of the economy are feeling about its future health," said Mouhcine Guettabi, an economist at the Institute for Social and Economic Research at the University of Alaska Anchorage.

The recession appears to be whittling away more slowly at other jobs within professional and business services. Jobs in legal services slipped from 1,444 in 2011 to 1,277 in 2015, a decline of 12 percent over four years, and appear poised for another slight drop in 2016. Jobs in accounting were down slightly from 2013 but essentially flat. Jobs in administrative and waste services have been slightly more resilient than the higher-paying categories and were just a couple of percentage points lower in 2016 than in 2015.

"The question now is whether those losses are now moderating," said Neal Fried, an economist at the state Department of Labor.

Ayers, a land surveyor who was working in Alaska in the mid-1980s during the state's worst post-oil recession and the subsequent recovery, has the experience to believe in the possibility of an upswing.

"Back then, I was the guy who got laid off, not the guy who owns the company," he said. "I'm obviously in a different position."

He believes a growing global population will bring oil prices back. He and his family are planning to remain in Alaska and he doesn't plan to retire for another few years.

And he doesn't count his firm among the ranks of the soon-to-be-insolvent. The company is working on the Spenard Road revamp and chasing federal contracts in the Interior with the arrival of F-35 fighter jet squadrons at Eielson Air Force Base. 

"Engineers are always going to be needed," Ayers said. "If you look at the demographics of engineers in Alaska and the nation as a whole, many are older and transitioning out. There will be demand."